Coinbase Says Miners’ Sales of Newly Minted Bitcoins Don’t Add Significant Market Pressure

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In a report looking at the crypto mining sector, coinbase says that if all newly issued bitcoin were immediately sold onto the market each day, it would equate to only 900 BTC of selling pressure. By willcanny99

A Bitfarms employee inspecting miners at Cowansville. A common concern during cyclical downturns in bitcoin mining is the extent to which miners are selling their BTC holdings, crypto exchange Coinbase said in a research report last week.

In times of market upheaval and a falling bitcoin price, margins compress across the board, and force more miners to become net sellers, the note said. Given the price drop and the resulting loss of profitability, the financing environment for the mining industry has “shifted materially” since late last year, and raising capital in the public markets has become very difficult, Coinbase said.

Still, even if all newly issued bitcoin were immediately sold onto the market each day, that would equate to only 900 BTC of selling pressure, which represents just 1%-1.5% of total daily volume, it added. A healthier bitcoin derivatives market should allow miners more options in terms of potential hedging strategies, the report added.

While the mining market may still be far from an equilibrium hashrate, miner selling and shuttering of activities in recent months has resulted in a falling network hashrate and ultimately mining difficulty, and once these trends flatten it could signal the start of a bottoming process, based on similar trends observed in the 2018

 

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